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Legal & General CEO Tim Breedon, said they can aid recovery

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Insurers could save Britain’s government billions of pounds if they took on more of its risk, though they would need a significant amount of extra capital to do so, Legal & General’s chief executive told the Sunday Telegraph.

“Through state pensions, unemployment benefits and the National Health Service, the government assumes responsibility for roughly 65 percent of the “addressable risk market,” and the private sector underwrites the remaining 35 percent … by implication, this 65-35 split needs to be adjusted,” L&G’s CEO Tim Breedon wrote in the Sunday Telegraph.

“Increasing the private sector’s share to 40 percent would save an estimated annual 17 billion pounds from public spending, but would require an estimated 9.7 billion of extra industry capital, according to Deloitte.”

Breedon said many “middle-class benefits” were now unsustainable because Britain’s public finances were in such a perilous state and that there was pressure to focus the state’s insurance role on those who cannot afford to self-insure.

The industry also needs to do more to encourage high standards of governance and corporate behaviour, said Breedon.